BUS A312
EXAM 3 REVIEW SHEET

CHAPTER 19: Accounting for Income Taxes
Distinguish between temporary and permanent differences when calculating taxes based on financial income versus taxable income.
Know the four sources of temporary differences and the accounting treatment of permanent differences.
Record transactions in the year of origin and in subsequent reversing years for deferred tax liabilities and deferred tax assets.
Record transaction related to net operating losses (i.e., loss carrybacks and loss carryforwards) using the back 2 / up 20 rule. You can ignore the use of a valuation account for loss carryforwards.

CHAPTER 20: Accounting for Pensions and Postretirement Benefits
Know the difference between a defined contribution plan and a defined benefit plan.
Identify the types of transactions that affect the pension expense account: service cost (amount will be given), interest cost (calculated), amortization of prior service costs (calculated), actual return on plan assets (amount will be given), and unexpected gain/loss in current year (calculated) and/or the amortization of unexpected gain/loss (calculated using 10% corridor).
Record transactions related to defined benefit plans using the worksheet approach for a single year . Know which accounts are reported on the financial statements and which accounts are not reported on the financial statements (i.e., "off-balance sheet").
You can ignore the appendices.

CHAPTER 21: Accounting for Leases
Know the advantages of leasing an asset as opposed to purchasing an asset.
You only need to need to know how to account for lease transactions from the perspective of the lessee (i.e., you can ignore the transactions recorded by the lessor).
Identify the criteria for determining whether a lease is a capital lease or operating lease.
Know the components of the minimum lease payment (basis for capitalization using present value tables).
Know the accounting treatment of a guaranteed residual value and a bargain purchase option.